Defaulted Energy Future Bonds Soar on Bankruptcy Conflict

Energy Future Holdings Corp.’s unsecured bonds are soaring to the highest level in a year as junior creditors challenge the power producer’s plan to restructure about $40 billion of debt in bankruptcy.

Bonds of the company that don’t have senior claims on assets returned 37.1 percent since April 29, when it filed for Chapter 11 protection, beating the 1.7 percent gain for all high-yield, high-risk securities, according to data compiled by Bloomberg. Energy Future, formerly known as TXU Corp., was the subject of a record $48 billion leveraged buyout in 2007.